While retailers often spread themselves too thin while in a growth mode, Touch of Modern has managed to buck this trend with a new payments management solution from Tipalti. Although annual revenue increased from $6 million to $100 million since onboarding the solution in 2012, the staff in accounts payable and finance has stayed the same.
Touch of Modern, a members-only web site dedicated to curating and selling undiscovered lifestyle products for men, partnered with more domestic and international product vendors as part of its growth stage. Therefore, the retailer had to figure out the best and most efficient way to pay these vendors — particularly the international ones that accounted for 20% of the business partnerships.
“We took a philosophy that we wanted to make it as easy for our vendors to work with us as possible, so we offered to pay them in whatever was convenient for them,” said Jonathan Wu, Chief Operating Officer and Co-Founder of Touch of Modern. “This meant everything from wire transfers to PayPal, in any currency they wanted, in any bank account around the world.”
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With the help of Tipalti, Touch of Modern integrated payment processes and data into one platform, and can now:
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Automatically upload invoices and pay vendors, allowing suppliers to be paid in a more timely fashion;
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Schedule payments in advance, greatly improving cash flow;
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Make payments to partner vendors in any currency; and
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Eliminate the need to interact with multiple banking systems, significantly reducing time, effort, and chance of error.
Releasing The Burden Of Manually Managing Payments
Prior to using Tipalti, Touch of Modern was managing accounts payable functions manually. At one point, Wu was the only executive handling accounts payable and finance duties, which meant that the process of uploading invoices could take a full week and paying vendors was painfully slow.
“Whenever we had to send a payment to a vendor, I had to personally manually key in all the bank account information, the address, the supplier information, process all the invoices, double check them and make sure they were getting paid,” Wu said in an interview with Retail TouchPoints. “When we were sending 100 payments per month, the process took a couple hours a day and it was very cumbersome. Of course, it was extremely prone to human error on both the vendor as well as our side, which can cause a payment to bounce.”
Today, the automated solution enables Touch of Modern vendors to key in their bank account and checking information and upload their invoices, enabling real-time payments. Now the Touch of Modern team can send out more than 2,000 payments per month.
Managing Global Growth Efficiently
During a time of global growth, Touch of Modern became aware of significant tax implications that are attached to sending money around the world. But Tipalti automatically integrates global tax compliance as part of its offering, helping the team adhere to complex filing and withholding requirements by the IRS.
Wu also stressed that Tipalti enabled the retailer to remain capital constrained throughout its expansion, which has factored into the company’s ability to onboard more international clients.
“I think most companies find working internationally very challenging, which is why many stray away from it,” Wu concluded. “It is certainly quite challenging from both the time barrier and the language barrier, but we find that the merchandise produced around the world is so unique that we can’t pass up the opportunity to discover and sell it to our customers. From our buying side, we have buyers waking up at the crack of dawn or staying awake past midnight to talk to our vendors so we can reach them at the best hours. We try to make it as easy for them to work with us as possible so that it feels like they’re just working with another local vendor.”